# Indiana mortgages: the 1% tax cap, IHCDA help and what a home costs

> Indiana mortgage numbers: the 1% homestead property tax cap, IHCDA down payment help of up to 5%, no transfer tax and the payment on a median home.

URL: https://mail.mortgage-math-us.com/location/indiana/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

The median Indiana home is worth $243,500 and costs about **$1,853 a month** with 10% down at the 7.24% national average rate. Property tax on a homestead is capped at 1% of gross assessed value, and the statewide effective rate is 0.74%. IHCDA’s First Step program lends 5% of the price toward the down payment for first-time buyers, and Next Home offers up to 3.5% to repeat buyers too.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Median home value in Indiana | $243,500 | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US18) | 2024 ACS 1-year |
| Median household income | $71,959/yr | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US18) | 2024 ACS 1-year |
| Effective property tax rate | 0.74% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US18) | 2024 ACS 1-year |
| Homestead property tax cap | 1% | [Indiana DLGF: Citizen’s guide to property tax](https://www.in.gov/dlgf/understanding-your-tax-bill/citizens-guide-to-property-tax) | Sep 21, 2026 |
| IHCDA First Step assistance (share of price) | 5% | [IHCDA Homeownership Program Guide](https://www.in.gov/ihcda/files/HOD-Universal-Program-Guide-Final%2010.16.26.pdf) | Oct 16, 2026 |
| IHCDA Next Home assistance, up to | 3.5% | [IHCDA: Homeownership programs](https://www.in.gov/ihcda/homebuyers/programs) | Oct 16, 2026 |
| Homes lived in by their owners | 70.7% | [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US18) | 2024 ACS 1-year |

## Indiana’s property tax cap on homesteads

Indiana law limits property tax on a homestead — the home you own and live in — to 1% of its gross assessed value. If the combined local rates would produce a larger bill, a circuit breaker credit cuts it back to the cap. Rentals, second homes and other property have higher caps, which matters if you buy to rent out.

On a home at the state’s median value, the cap works out to $2,435 a year. The median Indiana homeowner actually pays $1,798, below that ceiling, partly because homestead deductions shrink the assessed value before rates apply. The statewide effective rate of 0.74% is below the national ratio of 0.89%.

> **Tip: File the homestead deduction once**
>
> Homestead treatment — the deductions and the lower cap — depends on filing a homestead deduction form with your county auditor. You don’t need to refile each year — only if the property is sold or the title changes. Check the seller’s tax bill and assume it will change once their deductions come off.

## What the median Indiana home costs a month

Indiana’s median home value is below the national figure — the 11th-lowest of the 50 states and DC — and its median household income of $71,959 is below the US figure.

> **Worked example: $243,500 home: 10% down conventional vs FHA with IHCDA First Step**
>
> | Monthly cost at 7.24%, 30-year fixed | 10% down conventional | FHA, 3.5% down |
> |---|---:|---:|
> | Loan amount | $219,150 | $239,090 (upfront premium financed) |
> | Principal and interest | $1,494 | $1,629 |
> | Property tax at 0.74% | $150 | $150 |
> | Insurance at $4.90 per $1,000 (Freddie Mac national average) | $99 | $99 |
> | PMI or FHA annual premium (0.55%) | $110 | $108 |
> | **Total** | **$1,853** | **$1,987** |
> 
> On the FHA side, First Step’s 5% assistance ($12,175) covers the $8,523 down payment and leaves $3,653 toward closing costs. The conventional route needs $24,350 of your own money for the down payment alone.

The FHA payment is $134 higher a month here, and the assistance has to be repaid when you sell, refinance or pay off the loan — the trade for keeping your savings. The [payment calculator](https://mail.mortgage-math-us.com/tools/mortgage-payment-calculator/?price=244000&down=10&tax=0.74&state=IN) opens with Indiana’s median price and tax rate.

## IHCDA First Step and Next Home

The Indiana Housing and Community Development Authority (IHCDA) runs its purchase programs through participating lenders, with FHA or conventional 30-year fixed-rate first mortgages:

| Program | Assistance | Who can use it |
|---|---|---|
| First Step | 5% of the purchase price | First-time buyers (no ownership interest in a principal residence in the last 3 years), buyers in targeted areas and eligible veterans |
| Next Home | Up to 3.5% of the lesser of price or appraised value | First-time and repeat buyers |
| Step Down | Rate only, no assistance | Same buyers as First Step |

In both programs the assistance is a non-forgivable second lien: it comes due when the first mortgage ends — at a sale, refinance or payoff — or when the home stops being your primary residence. IHCDA sets income and purchase price limits by county and family size, and the credit score and debt-to-income limits come from IHCDA and its master servicer, so ask a participating lender for the current figures. Each occupying borrower needs a homebuyer education certificate; IHCDA accepts Fannie Mae’s and Freddie Mac’s online courses. See the [homebuyer education guide](https://mail.mortgage-math-us.com/first-time-buyers/homebuyer-education/) and the [first-time buyer programs guide](https://mail.mortgage-math-us.com/first-time-buyers/programs/) for how this compares with other help.

## Closing costs without a transfer tax

Indiana has no state real estate transfer tax, so the main closing costs are lender fees, title insurance, recording fees, prepaid interest and escrow deposits. The CFPB puts typical closing costs at 2%–5% of the price — $4,870–$12,175 on the median home. Your Loan Estimate gives the real numbers; the [closing cost estimator](https://mail.mortgage-math-us.com/tools/closing-cost-calculator/?state=IN) gives a first look.

## Indiana incomes and Indiana prices

Prices and paychecks line up better here than in most states. The median home costs 3.4 times the median household income, against 4.4 for the US — the 8th-lowest ratio of the 50 states and DC. On the median income, Freddie Mac’s guideline of keeping housing under 30% of gross income allows $1,799 a month, enough for about **$236,000** with 10% down at today’s average rate — $7,500 less than the median home value. Owning the median home on those terms takes an income of about $74,100; test your own in the [affordability calculator](https://mail.mortgage-math-us.com/tools/affordability-calculator/?state=IN&income=71959).

*Indiana compared with the US (Census ACS 2024 1-year)*

| | Indiana | United States |
|---|---:|---:|
| Median home value | $243,500 | $360,600 |
| Median household income | $71,959 | $81,604 |
| Home value ÷ income | 3.4× | 4.4× |
| Effective property tax rate | 0.74% | 0.89% |
| Median gross rent | $1,104/mo | $1,487/mo |
| Median owner costs with a mortgage | $1,466/mo | $2,035/mo |
| Median year built | 1977 | 1981 |
| Homes lived in by their owners | 70.7% | 65.3% |

Indiana’s owner share is the 14th-highest in the country. If you rent now, the [rent vs buy calculator](https://mail.mortgage-math-us.com/tools/rent-vs-buy-calculator/?state=IN&price=244000&rent=1104) opens with Indiana’s median price and rent so you can see how long it takes owning to come out ahead.

## Frequently asked questions

### What is the property tax cap in Indiana?

Property tax on a homestead is capped at 1% of gross assessed value. Other residential property and other real estate have higher caps. You must file a homestead deduction with your county auditor for the home to be treated as a homestead.

### What is the property tax rate in Indiana?

Census data put the median Indiana homeowner’s bill at $1,798 a year, about 0.74% of median home value, compared with 0.89% nationally.

### Does Indiana have first-time homebuyer assistance?

Yes. IHCDA’s First Step program gives first-time buyers, buyers in targeted areas and eligible veterans 5% of the purchase price as a second lien that is repaid when the first mortgage ends.

### Can repeat buyers get help from IHCDA?

Yes. Next Home has no first-time buyer requirement and provides up to 3.5% of the lesser of the price or appraised value, also as a repayable second lien.

### Does Indiana have a real estate transfer tax?

No. Indiana has no statewide transfer tax, so buyers mainly pay lender, title, recording and escrow costs at closing.

### How much do you need to earn to buy a median home in Indiana?

The median $243,500 home with 10% down costs about $1,853 a month at today’s average rate. Keeping that under 30% of gross income takes about $74,100 a year.

## Sources

- [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=040XX00US18) — Median value of owner-occupied homes (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=040XX00US18) — Median household income (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=040XX00US18) — Effective property tax rate (median taxes ÷ median home value); Median real estate taxes paid by homeowners (2024 ACS 1-year)
- [Freddie Mac Research](https://www.freddiemac.com/research/insight/homeowners-insurance-costs) — Average homeowners insurance premium per $1,000 of home value (2023 data)
- [Freddie Mac My Home](https://myhome.freddiemac.com/buying/breaking-down-pmi) — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026)
- [Indiana DLGF: Citizen’s guide to property tax](https://www.in.gov/dlgf/understanding-your-tax-bill/citizens-guide-to-property-tax) — Indiana property tax cap on a homestead (share of gross assessed value) (Sep 21, 2026)
- [IHCDA Homeownership Program Guide](https://www.in.gov/ihcda/files/HOD-Universal-Program-Guide-Final%2010.16.26.pdf) — IHCDA First Step down payment assistance (share of the purchase price) (Oct 16, 2026)
- [IHCDA: Homeownership programs](https://www.in.gov/ihcda/homebuyers/programs) — IHCDA Next Home down payment assistance, up to (share of the lesser of price or appraised value) (Oct 16, 2026)
- [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum FHA down payment; Typical closing costs, low end (share of purchase price); Typical closing costs, high end (share of purchase price) (Oct 28, 2026)
- [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP, 30-year loan, more than 95% LTV (Feb 22, 2023)
- [Freddie Mac My Home](https://myhome.freddiemac.com/blog/homebuying/how-much-can-you-afford) — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25103?g=010XX00US) — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year)
- [26 U.S.C. 143(d)](https://www.govinfo.gov/link/uscode/26/143) — MCC and mortgage revenue bond loans: no ownership interest in a principal residence in the past (Oct 28, 2026)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B19013?g=010XX00US) — Median household income (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=040XX00US18) — Median gross rent (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25064?g=010XX00US) — Median gross rent (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=040XX00US18) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25088?g=010XX00US) — Median monthly owner costs, homes with a mortgage (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=040XX00US18) — Median year homes were built (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25035?g=010XX00US) — Median year homes were built (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=040XX00US18) — Share of occupied homes lived in by their owners (2024 ACS 1-year)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25003?g=010XX00US) — Share of occupied homes lived in by their owners (2024 ACS 1-year)
- [IHCDA: Homeownership programs](https://www.in.gov/ihcda/homebuyers/programs)
- [IHCDA Homeownership Program Guide](https://www.in.gov/ihcda/files/HOD-Universal-Program-Guide-Final%2010.16.26.pdf)
- [Indiana DLGF: Citizen’s guide to property tax](https://www.in.gov/dlgf/understanding-your-tax-bill/citizens-guide-to-property-tax)
- [Indiana DLGF: Deductions and credits](https://www.in.gov/dlgf/deductions-and-credits)

_General information, not financial advice._